Are you saving for the future? Many people struggle with knowing where to start when it comes to saving. While some seek advice on how to invest or diversify their savings, others are simply unsure of how to begin. If you’re one of those people who feels unsure about how to start saving, you’re not alone. Even individuals with higher incomes often find themselves living paycheck to paycheck, with little to no savings for emergencies or retirement. The good news is that it’s never too late to begin. There are plenty of simple ways to start saving, even in small amounts, that can help improve your financial future without drastically altering your current lifestyle.
When it comes to saving, the issue often isn’t how much money you earn, but rather how much you spend. While unavoidable expenses, such as medical bills or home repairs, can make it difficult to save, for many people, excessive spending is simply a habit that can be changed with little effort. It’s easy to feel overwhelmed by the thought of saving, especially when it seems like a daunting task. However, taking small, manageable steps today can help set you on the path to a secure financial future. Getting started is easier than it seems, and there are simple strategies that can help you begin saving right now.
Tip #1: Put it aside
When considering a major purchase, like a car, or even a smaller one, like a pair of shoes, try pausing for a week or two before making a decision. Give yourself time to reflect and think it through. After that time, if you still feel it’s the right choice, move forward knowing it’s a well-considered decision, not just an impulse buy. If not, skip it. Most of us have made at least one purchase we later regretted—if not more. Imagine if you could get that money back and have it earning interest in your savings account instead. Over time, it could really add up.
Tip #2: Pay yourself first
When you receive your paycheck, you likely prioritize paying your mortgage or rent, your car payment, your insurance, and so on. But somewhere near the bottom of that list is you. Why? It’s probably because you know there’s no immediate penalty for not paying yourself. It’s time to change that mindset and hold yourself accountable. Make saving a priority by putting money into your savings account first, before covering your other expenses. By taking care of yourself upfront, you’ll eliminate any excuses by the end of the month. As long as your monthly bills don’t exceed your income, you can easily set aside a comfortable, consistent amount to save each month.
Tip #3: Shop smarter
In our fast-paced lives, it’s easy to grab a quick snack or coffee when it’s convenient. But if you stop at a convenience store for a 12 oz. coffee every morning, you’re likely spending at least $2.00 daily—and that quickly adds up. Have you ever considered how much you could save by making your own coffee? And what about the power of interest on those savings? If you saved just $600 a year in a basic savings account with a 5% annual return, after 30 years, you could have over $30,000 (after taxes). That’s the impact of consistently saving—even small amounts. Just $2 a day adds up to well over $600 by the end of the year. Start paying attention to those “small” daily expenses—they really can make a big difference over time.
Tip #4: See your destination
They say hindsight is 20/20. Imagine this: if 10 years ago you had started saving just $200 a month in a shoebox under your bed, you’d have $24,000 by now! While you can’t go back in time, you can certainly look ahead. Take advantage of free financial calculators available online and start plugging in numbers to see where your savings could take you in 20-30 years, depending on how much you start saving today. Once you see the potential, saving money might just become your favorite hobby—a fun competition with yourself to see how much you can grow your future net worth.
Tip #5: Ditch the shoebox
Speaking of that hypothetical shoebox under your bed, while the money inside might gather dust, it certainly won’t earn any interest. And while it is unlikely that you’re storing cash in a shoebox, it’s worth considering where and how you’re saving your money. Traditional savings accounts do offer interest, but there are other options that could potentially yield higher returns. You’ve probably heard of money market accounts or certificates of deposit (CDs), but might not be sure exactly what they are or if they’re right for you. It’s important to educate yourself about your options and make informed decisions when it comes to managing your finances.
Saving for the future doesn’t have to be overwhelming. By making small, intentional changes in your spending habits and prioritizing savings, you can start building a more secure financial future today. Whether it’s putting money aside before spending on other expenses, making smarter purchases, or exploring better savings options, every step you take brings you closer to your goals. Remember, it’s not about how much you earn—it’s about how wisely you manage and save your money. Take the time now to plan for the future, and you’ll be amazed at how much you can achieve over time. Start today, and watch your financial well-being grow.
Tax Efficiency in Retirement
As you approach retirement, one of the most important considerations is how to manage your tax liability. While many retirees expect lower taxes in their later years, the reality can be more complex. The way you generate income in retirement—whether from work, retirement accounts, or Social Security—will play a significant role in determining your tax burden. Understanding the different types of retirement accounts, such as pre-tax investments like traditional IRAs and 401(k)s or after-tax options like Roth IRAs, is crucial for making informed decisions about your retirement strategy.
Will you pay higher taxes in retirement? It’s possible, but it will largely depend on how you generate income. Will it be from working? Will it be from retirement plans? And if it does come from retirement plans, will distributions come from pre-tax or after-tax/Roth accounts? Understanding the types of accounts you have and their tax liability is crucial to retirement income and tax planning. Another factor to consider is the role Social Security will play in your retirement. When do you plan to start to take Social Security benefits? If you have a spouse, when do they plan on taking benefits? It’s critical to answer key Social Security benefits questions so you have a better understanding of how it will affect your taxable income.
What’s a pre-tax investment? Traditional IRAs and 401(k)s are examples of pre-tax investments that are designed to help you save for retirement. You won’t pay any taxes on the contributions you make to these accounts until you start to take distributions. Pre-tax investments are also called tax-deferred investments, as the money you accumulate in these accounts can benefit from tax-deferred growth. For individuals covered by a retirement plan at work, the tax deduction for a traditional IRA contribution in 2025 is phased out for incomes between $126,000 and $146,000 for married couples filing jointly, and between $79,000 and $89,000 for single filers.1 Keep in mind that once you reach age 73, you must begin taking required minimum distributions from a traditional IRA, 401(k), and other defined contribution plans in most circumstances. Withdrawals are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty.
What’s an after-tax investment? A Roth IRA is the most well-known. When you put money into a Roth IRA, the contribution is made with after-tax dollars. Like a traditional IRA, contributions to a Roth IRA are limited based on income. For 2025, contributions to a Roth IRA are phased out between $236,000 and $246,000 for married couples filing jointly and between $150,000 and $165,000 for single filers.1 To qualify for the tax-free and penalty-free withdrawal of earnings, Roth IRA distributions must meet a five-year holding requirement and occur after age 59½. Tax-free and penalty-free withdrawals can also be made under certain circumstances, such as in the event of the owner’s death. Additionally, the original Roth IRA owner is not required to take minimum annual withdrawals.
Are you striving for greater tax efficiency? In retirement, it is especially important – and worth a discussion. A few financial adjustments may help you manage your tax liabilities. Talk with one of our professionals to start planning today!
1. IRS.gov, 2025
Cyber Safety Tip: Update
We’ve all been there. You’re scrolling through your phone, computer, or tablet, and a notification pops up.
“Update Me!”
While that isn’t the exact wording, the meaning is the same. Something wants to be updated to the most recent version. But the banner gets in your way, and you tab it to the side, thinking you will get to it later.
Then we forget it.
This doesn’t seem like a big deal. But it turns out updating your programs can be one of the easiest ways to make your life safer in the long run.
Some software updates contain security measures that help patch vulnerabilities that could lead to a cyberattack. They may include safety features that help keep intruders out if your phone is hacked or stolen.
So the next time you get an annoying pop-up asking for an update, take the extra time and get your device up to speed.
It could be the easiest security upgrade you ever have.
PRO TIP: Some antivirus programs can check your device for updates and keep you current (though it may cost extra, so read up before you click).
The Best Laid Plans
Even the most thought-out financial strategy may need to be adjusted for unexpected events, such as changes to your family life or career, or shifts in your family priorities. These are important opportunities for you to connect with our team and ensure that any necessary adjustments are made to accommodate your new or shifting goals.
Some of the most common life events that may prompt a change include:
- New child or grandchild
- Large purchase (home, vacation property, college, etc.)
- Death in the family
- Employment changes (retirement, new job, promotion, etc.)
- Health and disability
Reasons Not to Write Your Own Will
Ever considered writing your own will? While you can draft a will on your own, there are plenty of reasons why you may not want to go that route. Most people do it to save money, but they may overlook or forget to take care of some important details – details that could eventually cost them much more than the amount they could save. Some of the biggest mistakes include:
Ignoring state law differences. Will kits and online wills may not always take state laws regarding the administration of probate into account. An estate planning attorney can inform you of these state laws; a will kit or website may not.
Not revoking an earlier will. Many wills contain boilerplate language that automatically revokes any preceding will. If you are writing your will totally on your own (some people still do), you may not realize the necessity of such a clause.
Assumptions. If you will property to an heir, what happens if you outlive that heir? What if you will an asset to a friend or relative today and that asset is gone when your will is executed someday? These are important things to contemplate; things that most people who write their own wills have not considered.
Vagueness. Sometimes executors are not given enough power by the language of a will. Sometimes a home will be left to a spouse, but with no one assigned to pay for upkeep of the home during the rest of that widow’s lifetime. Alternate executors are sometimes omitted from wills, and names of nonprofit groups can easily be misstated or misspelled, inviting complication and possible dispute of charitable intent.
Keep in mind this article is for informational purposes only and is not a replacement for real-life advice. You may want to consider consulting a legal professional before making any changes to your estate strategy. Instead of searching the Internet or the Yellow Pages for a stranger, ask your Shepherd Financial wealth advisor for a referral.
Life Insurance at an Early Age
Perhaps you’ve heard the maxim, “Preparation is the key to success.” But when it comes to life insurance, knowing when to prepare is almost more important than the preparation, itself.
Sure, it can be difficult to think about life insurance as early as your 20s, but life moves pretty fast sometimes. Before you know it, you’ll be in your 30s and possibly supporting a family. Even if you have a different life plan, taking care of those who matter most is always a wise move.
Many consumers believe they simply can’t afford life insurance on top of all the other bills they pay at an early age. That’s a valid concern! After all, you should never engage in any sort of financial venture beyond your means.
Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
Insurance can be an intimidating topic, but it doesn’t have to be. Even if right now isn’t the best time to purchase life insurance, discussing the future is a smart move.
National Estate Planning Awareness Month
October is National Estate Planning Awareness Month. Have you created or updated your estate plan?
Plan for tomorrow (today).
That seems like sensible advice, doesn’t it? Yet a surprising number of people leave no estate plan in place for their survivors. It makes a certain amount of sense. Nobody likes talking about death. But this is exactly why you should make an effort to create and maintain an estate plan: you simply won’t be there to settle matters when the time comes.
Everyone has an estate.
Someday, it will be someone’s job to account for the things you leave behind when you die. This goes for homeowners and renters, those who are retired, those who are working full-time, and everyone from every walk of life.
Everyone needs an estate plan.
Without your instructions, it could be decided in court. If you don’t leave behind an estate plan, your family could face major legal issues and, potentially, bitter disputes. Your estate plan may include wills and trusts, life insurance, disability insurance, guidance on the care for children and other dependents, powers of attorney, a living will, medical directives, anatomical donation directives, a pre-or post-nuptial agreement, extended care insurance, charitable gifts, debts, passwords, digital assets, and more.
Why not just a will?
While your will may state who your beneficiaries are, they may still have to seek a court order to have assets transferred from your name to theirs. Estate planning can include items like properly prepared and funded trusts, which could help your heirs to avoid probate. Probate can be an expensive process and lock up assets during the time they’re needed most.
Beneficiary designations on qualified retirement plans and life insurance policies usually override bequests made in wills or trusts. Many people never review the beneficiary designations on their retirement plan accounts and insurance policies, and the estate planning consequences of this inattention can be serious. Having an estate plan means keeping the estate plan updated, as time passes or changes happen in your family.
Where do you begin?
We recommend that you speak with a qualified financial professional – one with experience in estate planning. Please contact us so that we can refer you to a good estate planning attorney and a qualified tax professional, and from there assist you in drafting your legal documents.
National Life Insurance Awareness Month
September is National Life Insurance Awareness Month, so it’s a great time to review your coverage.1 If you don’t have any life insurance, you’re not alone. Life insurance is one of those ‘someday’ things for many people, but the cheapest time to buy it is probably today.
There are two kinds of life insurance: term and permanent. Additionally, there are three kinds of permanent life insurance: whole, universal, and variable.
How do these forms of life insurance differ, and how do you find out which type of coverage is right for you? The way to find out is to look at where you are in life, so that you can assess your current insurance needs. Have you reviewed your insurance lately? Don’t think you need life insurance? If so, consider the following potential factors that may make it a good idea:
You have a spouse or partner
You have children
You have an aging parent or disabled relative who depends on you for support
Your household depends heavily on your income
Your retirement savings or pension won’t be enough for your spouse or partner to live on should you pass away
You own a business, either solely or with partners
You have a substantial joint financial obligation, such as a personal loan for which another person could be legally responsible after your death
In any of these circumstances, you may require life insurance. If you have coverage, changes in your life may demand an update.
The affordability of life insurance may surprise you. Many people think it is expensive, and so often, it is not. A 20-year term life policy with $500,000 in death benefits can cost you less than $70 a month.2 Life insurance is intended to help your loved ones financially after you die. The proceeds from a life insurance policy may help your spouse, partner, or family members manage finances if they have to adjust to life without your income. The death benefit may also be used to meet funeral costs and other final expenses, which may run into the tens of thousands of dollars.
Are you still unsure about buying life insurance, or do you suspect that your current insurance coverage needs to be updated? Our team would be happy to assist you in evaluating all the factors and help you choose an appropriate policy.
1. Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
2. ValuePenguin.com, 2023. Based on a male in excellent health.
SECURE 2.0: Catch-Up Contributions
With SECURE 2.0’s increased catch-up contribution limits set to take effect next year, it’s time for 401(k) plan sponsors to brush up on the rules and consider how to administer the changes. Under the current rules, 401(k) plans may allow participants to make catch-up contributions when they are age 50 or older. For 2024, the catch-up contribution limit is $7,500.
SECURE 2.0 creates a window of increased catch-up contribution limits for participants ages 60 – 63. Below are key questions 401(k) plan sponsors are asking about this change:
Are the changes mandatory?
Plan sponsors are not required to offer catch-up contributions. However, if a plan allows for catch-up contributions, it is important to check with the plan’s recordkeeper to determine whether or not opting out of the increased catch-up contribution limit will be permitted.
When do the changes take effect?
The new limits take effect for tax years beginning after December 31, 2024.
Which participants are eligible for the increased limit?
Participants are eligible for the increased limits for the years in which they attain ages 60, 61, 62, and 63.
What is the increased limit?
The increased catch-up contribution limit for eligible participants is the greater of: (a) $10,000, subject to cost-of-living adjustments starting in 2026; or (b) 150% of the limit in effect for 2024 (i.e., $11,250).
While the change seems straightforward, administration may be complex. For example, plan sponsors should consider how to track eligibility for the increased limits, in addition to tracking eligibility for regular catch-up contributions. Plan sponsors should also consider how to re-impose the lower catch-up contribution limits when participants age out of the higher limits. Employers may need to work with their payroll teams and update their existing processes (e.g., payroll codes) to implement these changes.
Finally, keep in mind that the increased catch-up contribution limits are separate from the SECURE 2.0 Roth catch-up rule for certain high-earning individuals, which the IRS delayed to 2026.
Considerations During Medicare’s Open Enrollment
How long has it been since you’ve reviewed your Medicare policy? With open enrollment fast approaching, there are a few questions you may want to ask yourself before you renew, add, drop, or switch coverage.
Have you switched doctors, or is your doctor no longer accepting your current plan? Or maybe your prescription drug needs have changed, and your Medicare plan doesn’t cover everything you need. Maybe you’re paying too much for your coverage and need to make adjustments. If you’ve reviewed your Medicare plan and realized you don’t quite have the coverage that you want, you can make changes during the fall open enrollment period. From October 15 – December 7, 2024, you can add, drop, or switch Medicare plans. Any changes will be effective on January 1, 2025, as long as the changes are submitted by the deadline.
Reviewing your Medicare coverage is an important part of your financial and insurance strategy. If you have any questions or need help navigating this process, reach out to the Shepherd Financial team.